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Great Britain: Parliament debates decision to replace the poll tax with a value added tax

PETER THOMPSON: The British Government has announced that it will scrap the poll tax, closing another chapter of the Thatcher era. The unpopularity of the tax cost Margaret Thatcher her job. And the results of a recent by-election disaster put her successor, John Major, on notice that his hold on power is also at risk. The job of revising the tax was given to Margaret Thatcher's original challenger, Michael Heseltine. Peter Cave reports from London.

PETER CAVE: Michael Heseltine waited for years for his chance to challenge Margaret Thatcher for the leadership of the Conservative Party, and he knew he was on a winner when the poll tax gave the iron lady a case of terminal rust. He became one of the poll tax's fiercest opponents on the Tory backbench. But, as events transpired, Mr Heseltine was beaten to his goal by John Major, who then showed that he had a sense of humour by making the unfortunate Mr Heseltine the Minister responsible for dealing with the poll tax. Mr Heseltine found himself caught between the dyed in the wool Thatcher rights, determined to defend Mrs Thatcher's flagship of conservative policy, and the rising new wave of conservative wets, determined to put enough distance between themselves and the publicly reviled tax to stop the ship going down with its captain.

Earlier this week, the Government shifted $10 billion of Council expenditure on to the Central Government, and put up value added tax from 15 to 17.5 per cent to pay for it. Today, Mr Heseltine announced that the flagship was to be scuttled.

MICHAEL HESELTINE: The public have not been persuaded that the charge is fair.

PETER CAVE: It was some time before Mr Heseltine could continue, amid jeers and catcalls.

MICHAEL HESELTINE: We have therefore decided that from the earliest possible moment, the community charge will be replaced by a new system of local taxation. After a careful reappraisal of the options, we have decided, in principle, to bring forward a new local tax, under which there will be a single Bill for each household, comprising two essential elements - the number of adults living there, and the value of the property.

PETER CAVE: The new tax will be very much a compromise - part poll tax, part property tax, with some consideration of the ability to pay. The Opposition immediately dubbed it a property poll tax. It's also clear that the Government has not been able to reach agreement on the finer details, and the new tax won't be introduced for two years, after the next elections. Labour spokesman, Bryan Gould.

BRYAN GOULD: We have just heard the most complete capitulation, the most startling U-turn, and the most shameless abandonment of consistency and principle in modern political history.

PETER CAVE: The Liberal Democrats, who recently took one of the Conservative Party's safest seats in the Rivell by-election, which was fought almost entirely on the issue of the poll tax, said the tax would still lose the Conservatives the next election. Spokesman, Alan Beith.

ALAN BEITH: Why has the Secretary of State chosen to move from the most unpopular local tax ever, to the second most unpopular local tax ever - straight from the frying pan into the fire?

PETER CAVE: Mrs Thatcher chose to absent herself from the Chamber as one of her most cherished achievements was scrapped. The Opposition Leader, Neil Kinnock - when it came his turn to speak - was at pains to point out that Prime Minister Major was Mrs Thatcher's Chancellor of the Exchequer and could not distance himself from the poll tax.

NEIL KINNOCK: Doesn't the Prime Minister agree with me that this Question Time is an appropriate moment for him to apologise to the British taxpayers for the 14.3 billion pounds which his Government has wasted on the poll tax fiasco?

JOHN MAJOR: The Right Honourable gentleman should explain what his phoney figures are, for he will know that 3 billion pound of the figures, included in his figures, are the non-payment partly created by his own side urging people not to pay.

PETER CAVE: Prime Minister John Major, who now has to decide whether or not the British voters will accept the new tax, and re-elect his Government if he calls an early election in June. This is Peter Cave reporting from London.